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FEDERATION OF EURO-ASIAN STOCK EXCHANGES SEMI ANNUAL REPORT MAY 2005
BANJA LUKA STOCK EXCHANGE
ECONOMIC AND POLITICAL DEVELOPMENTS
Politic and Economic Environment:
Bosnia and Herzegovina (BiH) is comprised
of two distinct entities – The Republic of
Srpska (RS), which accounts for one-third of
the population and contains mostly Serbs,
and the Federation of Bosnia and
Herzegovina (Federation), which accounts
for the other two-thirds of the population and
consists mostly of Muslims and Croats. Both
entities enjoy significant autonomy, with their
own police, army, and tax and customs
systems. There is also a tiny Northern district
controlled by both entities called Brcko,
which has its own tax laws.
BiH’s economy is well-diversified. Services
account for nearly three-fifths of GDP,
industry nearly a quarter and agriculture just
under one-fifth. The relative share of
agriculture is twice as high in the RS as in
the more urbanized Bosnia and Herzegovina
Federation.
Key Information Contacts
Republic of Srpska Securities Commission www.khov-rs.org
Central Registry of Securities www.crhovrs.org
Government of Republic of Srpska www.vladars.net
Central Bank of BiH www.cbbh.ba
Tax Administration of Republic of Srpska www.poreskaupravars.org
ECONOMIC RATIOS
Domestic
savings
PAGE 52
Bosnia & Herzegovina
Lower-middle-income group
Trade
Indebtedness
Investment
A lot of progress has been made at reducing
ethnic tensions and rebuilding basic
infrastructure and that provides a basis for
future growth. Real GDP has been buoyant
since the mid-1990s with the economy
recovering from its low war-era base.
In October 2002, Bosnia was scheduled to
hold its fourth presidential election within the
strictures of the tripartite system, which had
been established under the Dayton Accords.
The members of the presidency at the time
included Beriz Belkic (Muslim/Bosniak), who
became chairman on Feb. 14, 2002; Jozo
Krizanovic (Croat); and Zivko Radisic (Serb).
The October 2002 elections involved 52
parties and over 7,000 candidates and
marked a historic turning point because they
were run by the Bosnian authorities and not
the international apparatus resulting from the
Dayton Accords.
GROWTH OF INVESTMENT AND GDP
(%)
40
35
30
25
20
15
10
5
0
-5
97
GDI GDP
Economic Performance:
The country's monetary policy has been
prudent and effective. After adoption in 1997
of a currency board arrangement linking the
convertible mark (KM) to the Deutsche mark
(now to the Euro), with controls on money
supply growth and a tightly managed foreign
exchange trading band, inflation rates have
largely stabilized in the lower single-digits.
Average inflation for the entire country was
0.3% in 2002 and even lower in 2003.
The consolidated fiscal deficit was reduced
from 2.2% of GDP in 2002 to a small surplus
of 0.4% in 2003 due to responsible spending
by both entities. In 1998, the government
subscribed to an IMF-financed economic
reform program, aimed at reconfiguring the
inefficient fiscal structure and sharply
reducing direct state participation in
productive sectors. 1
1 Economic and Political Overview, County Watch
Incorporated, 2005
98 99 00 01 02 03
* World Bank reports